Difficult path seen for Illinois workers comp reform
Workers compensation reform in the state of Illinois may be tough given the political climate in the state, experts said.
Illinois lawmakers voted Thursday to override Gov. Bruce Rauner’s veto of a package of budget bills and instate a budget, but workers compensation reform considered in separate bills has yet to move forward.
“First and foremost, things need to cool down considerably,” said Steve Schneider, Chicago-based vice president for state affairs, Midwest region, American Insurance Association. “The governor vetoed the tax increase and the two budget bills, and then his vetoes were overridden by House majority Democrats with some assistance from some House Republicans. This set the stage for a nasty set of comments between the governor and the speaker of the House. I don’t think that’s going to cool down for a long time, probably until well after the elections in November in 2018.”
Mr. Schneider said the opportunity, sentiment or climate for achieving positive workers compensation reform is likely to be weak, if not nonexistent, going forward.
“There is a lot of toxicity down there,” said Jeffrey Junkas, Chicago-based assistant vice president of state government relations at the Property Casualty Insurers Association of America. “They have been around intense situations for weeks on end. … There is definitely a need for a break and a cooling-off period, but there is not a need for a break or cooling-off period in terms of looking at systemic reforms including workers compensation that help move the needle on the underlying costs that really drive the premiums the businesses pay.”
Key workers comp reform issues experts say Illinois should be focusing on are implementing a drug formulary and banning dispensation of prescription drugs by doctors in a nonpharmacy setting.
“A number of states ranging from Texas, Michigan and New York have taken steps along those lines. We need to rein in medical costs by adopting a Medicare-based fee schedule system for medical procedures that are included in workers compensation. Twenty-nine states have a system like that. There is no reason that Illinois shouldn’t either,” said Mr. Schneider.
House Bill 4068, which proposed a drug formulary, saw no forward movement and is likely dead, said Mr. Schneider. The bill, sponsored by Rep. Jim Durkin, R-Western Springs, proposed a Medicare-based fee schedule and would have capped maximum weekly benefits at $775.15 through 2021. Insurance trade associations said the bill addressed many of the key issues in the Illinois workers comp system.
“Having a clear-cut Medicare-based fee schedule is going to go a long way to help predict and manage claim costs and medical costs,” he said.
Other workers comp bills introduced this year include House Bill 2525, which would create a government insurance company to help regulate the marketplace, and House Bill 2622, which would create the Illinois Employers Mutual Insurance Co., a state fund. These bills have drawn opposition from insurance trade associations that say the measures are “anti-reform” and don’t addresses the real issues. Both bills are awaiting a signature from the governor and are currently under review, a spokeswoman for the governor said Tuesday.
Rep. Laura Fine, a sponsor of House Bill 2622, said the bill would form a nonprofit workers comp fund that would not be focused on making a profit. “Then they would be able to keep an eye on keeping those rates low for our employers,” Ms. Fine said in a Monday interview with Business Insurance.
Rep. Jay Hoffman, a sponsor of House Bill 2525, said the bill would bring comprehensive reform by making Illinois a state that has prior rate approval of insurance workers comp rates, as well as an enhanced fraud unit.
“In 2011, a bill was passed that provided comprehensive cost reduction in the workers comp system by taking away some benefits and reducing the amount that providers of medical procedures receive by 30%, yet we haven’t seen those (savings) passed on by the insurance companies to employers,” Mr. Hoffman said in a Tuesday interview with Business Insurance.
“Right now, a lot of it is in the governor’s court,” Ms. Fine. “We’ve given him a lot of possibilities to reform workers comp insurance in the state of Illinois and reduce those prices for our employers who have to buy the insurance. It’s up to him to say, ‘I’m going to work with the legislature and make sure that something goes through.’”